ORCL is flat in the past 2 years, despite the 50%+ rally in the S&P 500 index in that time. The company has been struggling to keep up with smaller competitors at the same time that enterprise spending has slowed overall. The company has continued to grow earnings in the past 2 years (by about 15% in fact), but its P/E multiple has contracted as the market’s expectations for future earnings growth has deflated:
Going forward though, analysts only project 5-10% earnings growth, and so the 15 P/E multiple does not look cheap anymore.
After a bad earnings miss last quarter, ORCL has rallied with the broader market, and actually filled in its earnings gap to the penny (at $33.21) earlier this week:
The gap coincides with the 200 day moving average, which has flattened out. Upside progress from here could be hard to come by given all of those underwater buyers throughout most of 2013. The important support level going forward is the $30 level, which has now held twice in the past year. The next earnings report for ORCL is in late September, though CSCO’s report next week could be a catalyst for ORCL as well.